Ansell fixing system issues

Glove and condom maker
Ansell
says problems with new business systems, which caused some products to be delivered to the wrong customers and blew a hole in its full-year earnings, would be fixed by the end of March.

Known internally as Project Fusion, work to install the enterprise resource planning (ERP) system got under way in the US, Canada and most of Latin America mid last year.

Big ERP projects are notoriously difficult to get right. Ansell flagged in October that it had experienced problems but the scale became clear on Wednesday when the company announced that it had lost sales of up to $15 million as a result of technical issues.

Chief executive Magnus Nicolin said coding problems had made it difficult for the ERP system to communicate with other business systems. This had resulted in the wrong products or quantities being delivered and Ansell lost customers. No customers in Australia have been affected by the glitch.

The system is based on Oracle technology and IBM has assisted with the integration. Mr Nicolin refused to comment on whether Ansell planned to seek damages from Oracle or IBM. He said it was working closely with both to make sure the system worked properly.

“We have been working 24/7 to fix the problem for several months," he said. “It’s probably going to take until the end of March to solve the now minor problems that we still have."

Mr Nicolin said Ansell’s new ERP system would provide faster and more accurate information, reducing administration and allowing staff to spend more time on sales.

Shawn Knox, who was previously Ansell’s chief information officer, has been heading up Project Fusion since October. It announced former Timberland executive Giri Peddinti as its new CIO last month.

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The problems have caused some delays in the three-year project but Mr Nicolin said Ansell was committed to completing the work on time and “would not be too far" from its stated $80 million budget. It expects to recoup that outlay in six years.

“You are always going to have issues when you run a company with 10,000 employees and operations in 50 countries," he said. “This is no different. It was bigger than we would have liked but we are overcoming it."

Chief executive of Red Rock Consulting, the largest Oracle partner in Australia, Jonathan Rubinsztein, said the problem with projects of this scale was often that companies tried to do too much at once.

“They do work but you have to break them up into bite-sized chunks," he said. “People get excited about projects that are worth $100 million but you really have to think of them as five $20 million projects."

State governments in Queensland and Western Australian both have recent experience of high-profile ERP project failures.

Denise Ganly, a research director with technology analyst company Gartner, said tight deadlines meant organisations sometimes didn’t do adequate testing of systems. It was also common to have poor performance until operating the new systems became embedded in the culture.